Q1. Sales (30,000 units) Tk.15,00,000 Tk.50Variable Expense 12,00,000 40Contribution Margin 300,000 Tk. 10Fixed Expenses 220,000 Net Operating Income 80,000 Required: Compute the company’s CM ratio and variable expense ratio. Compute company’s Break Even Point in both unit sales and dollar sales. Use the formula method. How many units would have to be sold each month to earn a target profit of Tk.80,000? If sales increase by Tk.350,000 next year and there is no change in fixed expenses, by how much would you expect net operating income to increase? Refer to original data. Compute company’s margin of safety in both dollar and percentage form. 6. Compute company’s degree of operating leverage at present level of sales. 7. If sales increase by 7.5%, by what percentage would you expect net operating income to increase?

Hi student Since there are multiple subparts, we will answer only first three subparts.

Answered: Q1. Sales (30,000 units)…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2CE

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Q1.

Sales (30,000 units)	Tk.15,00,000	Tk.50
Variable Expense	12,00,000	40
Contribution Margin	300,000	Tk. 10
Fixed Expenses	220,000
Net Operating Income	80,000

Required:

Compute the company’s CM ratio and variable expense ratio.
Compute company’s Break Even Point in both unit sales and dollar sales. Use the formula method.
How many units would have to be sold each month to earn a target profit of Tk.80,000?
If sales increase by Tk.350,000 next year and there is no change in fixed expenses, by how much would you expect net operating income to increase?
Refer to original data. Compute company’s margin of safety in both dollar and percentage form.

6. Compute company’s degree of operating leverage at present level of sales. 7. If sales increase by 7.5%, by what percentage would you expect net operating income to increase?

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